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Exhibit 1 - Agenda Information Sheet - Additional FundsCity of Denton _____________________________________________________________________________________ AGENDA INFORMATION SHEET DEPARTMENT: Procurement ACM: Cassey Ogden DATE: February 21, 2023 SUBJECT Consider adoption of an ordinance of the City of Denton, a Texas home-rule municipal corporation, ratifying the expenditure of funds by the City Manager, for the emergency purchase of transformers for Denton Municipal Electric; and providing an effective date (File 8169-1 – awarded to Solomon Corporation, in the not-to-exceed amount of $108,075.00). The Public Utilities Board recommends approval (5 - 0). INFORMATION/BACKGROUND This Declaration is for rebuilt electric utility transformers needed to provide restoration of, and service to customers and is founded on current supply chain issues being experienced across the electric utility industry and Denton Municipal Electric (DME). Section 252.022 of the Texas Local Government Code provides exemptions associated with purchasing requirements which include (1) a procurement made because of a public calamity that requires the immediate appropriation of money to relieve the necessity of the municipality’s residents..., and (2) a procurement necessary to preserve or protect the public health or safety of the municipality’s residents. Denton’s current inventory of transformers is at levels reserved for normal, daily electric service operational responsibilities and emergency response. For new construction, DME prioritizes transformers on a project first come, first ready basis for customers and developers that have inspections and permits complete. DME has forty-five projects designed and released to construction or ready to be released for construction. DME has another 128 projects currently in the design phase. DME has notified customers and developers that the utility may not be able to provide immediate service due to the low inventory of transformers and the current supply chain issues. Supply chain issues for distribution transformers continue to be a challenge. Major shortages are being experienced nationwide of critical electric utility equipment such as electric distribution transformers, underground cables, substation equipment, and other equipment necessary to maintain and provide electric service in Denton. The need for this Declaration of an Emergency stems from lead times on transformers approaching 76 weeks in some instances. Vendors cannot provide reliable estimates of lead times for equipment. DME has seen an increase of 250% or more in the average cost of transformers supplied by its contracted vendor. Table 1 provides a list of orders for transformers needed under this Declaration of an Emergency to help mitigate some of the supply chain issues and help support DME’s stock levels of transformers. Failure to declare an emergency could cause inventory levels to drop further below minimum acceptable levels. City Hall 215 E. McKinney Street Denton, Texas www.cityofdenton.com Table 1 Transformer Size Transformer Cost Quantity Total Cost 750kVA 208/120 PM $35,450.00 1 $35,450.00 750kVA 480/277 PM $35,450.00 1 $35,450.00 750kVA 480/277 PM $37,175.00 1 $37,175.00 Purchase Order Total Cost: $108,075.00 Approval of a Declaration of an Emergency, with a one-time spend authority of $108,075.00, allows DME to better position its transformer inventory for service and minimize the growing backlog of transformer orders. PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS) On December 13, 2022, City Council approved the emergency purchase with Solomon Corporation (Ordinance 22-2500). On February 13, 2023, the Public Utilities Board (PUB) recommended this item to the City Council for consideration. RECOMMENDATION Approve the emergency purchase of rebuilt electric utility transformers for Denton Municipal Electric, in a not-to-exceed amount of $108,075. PRINCIPAL PLACE OF BUSINESS Solomon Corporation Solomon, KS ESTIMATED SCHEDULE OF PROJECT Delivery of the items will occur within 365 days after receipt of order. FISCAL INFORMATION These items will be funded from FY22/23 Transformers account 605227500.1350.3680. Purchase Order #202446 has been entered into the Purchasing software system in the amount of $108,075. The budgeted amount for this item is $108,075. EXHIBITS Exhibit 1: Agenda Information Sheet Exhibit 2: Declaration of Emergency Exhibit 3: Ordinance Respectfully submitted: Lori Hewell, 940-349-7100 Purchasing Manager For information concerning this acquisition, contact: Randy Key, 940-349-7665. Legal point of contact: Marcella Lunn at 940-349-8333.